J
Jun Wu
Member
Dear All
Hope you are well.
X3 Assignment X3.6
May I ask how per policy expense is calculated please?
We know - Per policy expenses are initially £1 per month throughout the life of the policy.
answer states:
1 Information on the per-policy expense is not very clear. Assume: £1 at 01/01/21, inflating at 1%
per month. For contracts starting 01/07/21, the starting amount is increased by 6 months of
inflation. So the present value of these expenses at inception is:
12 × 1.01^6 = 12.74 [1]
Q: are we saying we have 12 pound of total per policy expense as at 01/01/2021, but because average inception is 01/07/21, at which time the value would be inflated by 1.01^6?
2 The expenses are assumed to be paid after 9 months (3 months later than the expected average
date), so there is another 3 months to discount at 1%, giving £12.37
Q: (n) tells us expense is paid 9 months after inception, why is it 3 months later than the expected average date? what is this expected average date? and why do we have to discount it for 3 months?
I thought discounting is only for working out present value at 01/07/21?
If possible, do you know where I can find more similar questions like this one from past papers or chapter end summary?
past paper 201304 Q9
On the part on working out adjusted incurred
2008 - 600 = 764*0.55/0.7, where 0.7 is the ILF difference between limit 50 and 200.
etc
why do we *0.55 and where it is come from? and why do we /0.7 not *0.7? I always thought we * ILF to get the loss cost to layer.
Really appreciated for your help
Best regards
Jun
Hope you are well.
X3 Assignment X3.6
May I ask how per policy expense is calculated please?
We know - Per policy expenses are initially £1 per month throughout the life of the policy.
answer states:
1 Information on the per-policy expense is not very clear. Assume: £1 at 01/01/21, inflating at 1%
per month. For contracts starting 01/07/21, the starting amount is increased by 6 months of
inflation. So the present value of these expenses at inception is:
12 × 1.01^6 = 12.74 [1]
Q: are we saying we have 12 pound of total per policy expense as at 01/01/2021, but because average inception is 01/07/21, at which time the value would be inflated by 1.01^6?
2 The expenses are assumed to be paid after 9 months (3 months later than the expected average
date), so there is another 3 months to discount at 1%, giving £12.37
Q: (n) tells us expense is paid 9 months after inception, why is it 3 months later than the expected average date? what is this expected average date? and why do we have to discount it for 3 months?
I thought discounting is only for working out present value at 01/07/21?
If possible, do you know where I can find more similar questions like this one from past papers or chapter end summary?
past paper 201304 Q9
On the part on working out adjusted incurred
2008 - 600 = 764*0.55/0.7, where 0.7 is the ILF difference between limit 50 and 200.
etc
why do we *0.55 and where it is come from? and why do we /0.7 not *0.7? I always thought we * ILF to get the loss cost to layer.
Really appreciated for your help
Best regards
Jun